In the real world, I can\u2019t change supply and demand any more than I can change gravity. Therefore, it\u2019s a given that we must ultimately find the balance and the \u2018happy medium\u2019 price upon which both buyer and seller agree. But is there only one true \u2018happy\u2019 price?<\/p>\n
Technically, market pricing is not a \u2018Point\u2019 but a \u2018Range of Reason.\u2019<\/strong><\/h2>\nWe witness this in RFPs constantly. If market pricing was a magic number, that magic number would win the RFP every time \u2013 but in practice, everything is relative.<\/p>\n
When one carrier is able to provide a distinct service, network or other competitive advantage over another, they are easily able to increase margin per kilo, cbm or container on the same, identical freight and transit.<\/p>\n
Here are 3 of the most common reasons customers happily pay more for the\u00a0exact<\/em><\/strong>\u00a0same shipment:<\/p>\n\n- This Sales Executive offers better insight on how to improve my supply chain<\/li>\n
- This Brand offers reduced errors, value adds, or the network is flexible<\/li>\n
- No one gets fired for choosing the \u2018Big Name on the Block\u2019<\/li>\n<\/ol>\n
In each of the above scenarios, I\u2019ve seen that an additional 5 to 35% margin can be created based on value contributed beyond the physical arrival of the goods on time. Now I can only speak for myself, but I imagine that most Sales, Operations, Finance and Product, owners would love to pick up an extra 5 to 35% margin across the board – and it may even break their sales goals for the year!<\/p>\n
Okay, but how do you get from Market Pricing to Differentiated Value?<\/strong><\/p>\n![](\"https:\/\/media.licdn.com\/mpr\/mpr\/AAMAAQDGAAgAAQAAAAAAAA82AAAAJDA5NDdmYzkzLTk4M2YtNDYwYy1hMjU5LTRkMDI2MWIyMWRjMw.jpg\")
<\/div>\nUnfortunately, it\u2019s well known that our industry is historically\u00a0and to date<\/em>\u00a0plagued with a standard range of 10 to 30% incorrect invoices. This is a far cry from zero, and I\u2019ve detailed these this in a\u00a0previous article\u00a0<\/strong><\/a>\u2013 but let\u2019s quickly review for posterity:<\/p>\n\n- Customers are angry about overbillings and don\u2019t even report under-billings<\/li>\n
- Sales receives every angry response, or worse is uninformed<\/li>\n
- Customer service & accounting have double work, processing invoice adjustments<\/li>\n
- Finance can\u2019t see the missing\/late data, and forecasts are incorrect by whole %\u2019s<\/li>\n
- Over-billings are often not accounted for in a timely manner for New or Renewed Contracts<\/li>\n
- Under-billings remain completely invisible<\/li>\n
- Pricing teams work from incomplete and incorrect data<\/li>\n
- And Sales is left less competitive on rates, meanwhile taking the relationship heat<\/li>\n<\/ul>\n
But if one option presents that they can pre-adjust and eliminate 95% of invoice discrepancies for no additional cost, I\u2019d wager that with all other perspectives being equal most customers will choose you. The pot gets even sweeter when the sales exec or account manager can also commit to review and quantify the benefits of these improvements quarterly, continually justifying improved margin and yield over the previously known \u2018market rate\u2019.<\/p>\n
How the next-gen carriers Flexport and Shippabo are growing so quickly:<\/strong><\/h2>\n![](\"https:\/\/media.licdn.com\/mpr\/mpr\/AAMAAQDGAAgAAQAAAAAAAA6PAAAAJDE2ZDYwMWE1LTU3NjYtNDg1My04OTEzLWY3NDIxYTk4ZmQ3YQ.jpg\")
<\/div>\nAre you keeping up with these guys?
\nWhile they\u2019re not yet at center stage, new generation tech firms like Flexport and Shippabo are certainly taking the scene by storm and in only a few short years have captured their share of multi-million-dollar air & ocean supply chains. One is \u2018flexing\u2019 their way into new stations with a $100M investment, and the other is reportedly generating $500k per customer service agent thanks to improved workflow tech.<\/p>\n
However, customers only care about technology if it\u2019s going to\u00a0do<\/em>\u00a0something for them\u2026.and here\u2019s what it\u2019s doing: these companies can, have and will 100% guarantee against invoice discrepancies. Their clients like world-famous production and animation studios out of northern Los Angeles have reported how under-billings and even late charges are immediately zero\u2019d without question.<\/p>\nThey\u2019re winning because they have an improved client experience, and they can easily quantify it by showing where they positively impact their client\u2019s customers, employees, and leadership in areas other than price and transit. As overheard at TPM, perhaps this is why some accounts are paying a few hundred per container more than previous contracts with traditional carriers.<\/p>\n
This is why I say we need to protect our customers and employees.<\/strong><\/h2>\nOver the past 5 years, what I\u2019ve learned is that the upper echelons of the forwarder and carrier hierarchy are heavily focused on reducing both customer and sales churn by improving customer experience. But without ground-up pricing automation like the new players, the technology bolt-on and spot-check task forces are unable to produce invoices at 95%+ accuracy the way that modern bench marking tools and processes can easily accomplish after only 5 hours of set-up.<\/p>\n
Your next steps…<\/strong><\/h2>\n\n- Let\u2019s connect<\/strong><\/a>,<\/strong>\u00a0if you\u2019d like to learn more about which metrics you can check in Air or Ocean to validate your dollars at risk and protect your teams,<\/li>\n
- Join the Cargo Revenue Protection LinkedIn group<\/strong><\/a>\u00a0to see how you can protect your organization’s revenue and profit margins so you can offer more competitive pricing to gain more clients and reduce customer churn.<\/li>\n
- Read our recent article on why IT is not enough<\/strong><\/a>\u00a0<\/strong>to maximize profits and why current technologies provide mixed results.<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"
Whether you got into the international freight business yesterday or have been around to watch the dawn of containerization, you\u2019re probably familiar with the fact that Air and Ocean freight rates are driven by \u201cmarket pricing\u201d for carriers, 3PL\u2019s and shippers alike. This is absolutely true\u2026but only to a degree. In the real world, I […]<\/p>\n","protected":false},"author":3,"featured_media":362,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[19,32],"tags":[],"_links":{"self":[{"href":"https:\/\/argglobal.net\/blog\/wp-json\/wp\/v2\/posts\/359"}],"collection":[{"href":"https:\/\/argglobal.net\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/argglobal.net\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/argglobal.net\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/argglobal.net\/blog\/wp-json\/wp\/v2\/comments?post=359"}],"version-history":[{"count":5,"href":"https:\/\/argglobal.net\/blog\/wp-json\/wp\/v2\/posts\/359\/revisions"}],"predecessor-version":[{"id":366,"href":"https:\/\/argglobal.net\/blog\/wp-json\/wp\/v2\/posts\/359\/revisions\/366"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/argglobal.net\/blog\/wp-json\/wp\/v2\/media\/362"}],"wp:attachment":[{"href":"https:\/\/argglobal.net\/blog\/wp-json\/wp\/v2\/media?parent=359"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/argglobal.net\/blog\/wp-json\/wp\/v2\/categories?post=359"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/argglobal.net\/blog\/wp-json\/wp\/v2\/tags?post=359"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
- \n
- This Sales Executive offers better insight on how to improve my supply chain<\/li>\n
- This Brand offers reduced errors, value adds, or the network is flexible<\/li>\n
- No one gets fired for choosing the \u2018Big Name on the Block\u2019<\/li>\n<\/ol>\n
In each of the above scenarios, I\u2019ve seen that an additional 5 to 35% margin can be created based on value contributed beyond the physical arrival of the goods on time. Now I can only speak for myself, but I imagine that most Sales, Operations, Finance and Product, owners would love to pick up an extra 5 to 35% margin across the board – and it may even break their sales goals for the year!<\/p>\n
Okay, but how do you get from Market Pricing to Differentiated Value?<\/strong><\/p>\n
<\/div>\nUnfortunately, it\u2019s well known that our industry is historically\u00a0and to date<\/em>\u00a0plagued with a standard range of 10 to 30% incorrect invoices. This is a far cry from zero, and I\u2019ve detailed these this in a\u00a0previous article\u00a0<\/strong><\/a>\u2013 but let\u2019s quickly review for posterity:<\/p>\n
- \n
- Customers are angry about overbillings and don\u2019t even report under-billings<\/li>\n
- Sales receives every angry response, or worse is uninformed<\/li>\n
- Customer service & accounting have double work, processing invoice adjustments<\/li>\n
- Finance can\u2019t see the missing\/late data, and forecasts are incorrect by whole %\u2019s<\/li>\n
- Over-billings are often not accounted for in a timely manner for New or Renewed Contracts<\/li>\n
- Under-billings remain completely invisible<\/li>\n
- Pricing teams work from incomplete and incorrect data<\/li>\n
- And Sales is left less competitive on rates, meanwhile taking the relationship heat<\/li>\n<\/ul>\n
But if one option presents that they can pre-adjust and eliminate 95% of invoice discrepancies for no additional cost, I\u2019d wager that with all other perspectives being equal most customers will choose you. The pot gets even sweeter when the sales exec or account manager can also commit to review and quantify the benefits of these improvements quarterly, continually justifying improved margin and yield over the previously known \u2018market rate\u2019.<\/p>\n
How the next-gen carriers Flexport and Shippabo are growing so quickly:<\/strong><\/h2>\n
<\/div>\nAre you keeping up with these guys?
\nWhile they\u2019re not yet at center stage, new generation tech firms like Flexport and Shippabo are certainly taking the scene by storm and in only a few short years have captured their share of multi-million-dollar air & ocean supply chains. One is \u2018flexing\u2019 their way into new stations with a $100M investment, and the other is reportedly generating $500k per customer service agent thanks to improved workflow tech.<\/p>\nHowever, customers only care about technology if it\u2019s going to\u00a0do<\/em>\u00a0something for them\u2026.and here\u2019s what it\u2019s doing: these companies can, have and will 100% guarantee against invoice discrepancies. Their clients like world-famous production and animation studios out of northern Los Angeles have reported how under-billings and even late charges are immediately zero\u2019d without question.<\/p>\n
They\u2019re winning because they have an improved client experience, and they can easily quantify it by showing where they positively impact their client\u2019s customers, employees, and leadership in areas other than price and transit. As overheard at TPM, perhaps this is why some accounts are paying a few hundred per container more than previous contracts with traditional carriers.<\/p>\n
This is why I say we need to protect our customers and employees.<\/strong><\/h2>\n
Over the past 5 years, what I\u2019ve learned is that the upper echelons of the forwarder and carrier hierarchy are heavily focused on reducing both customer and sales churn by improving customer experience. But without ground-up pricing automation like the new players, the technology bolt-on and spot-check task forces are unable to produce invoices at 95%+ accuracy the way that modern bench marking tools and processes can easily accomplish after only 5 hours of set-up.<\/p>\n
Your next steps…<\/strong><\/h2>\n
- \n
- Let\u2019s connect<\/strong><\/a>,<\/strong>\u00a0if you\u2019d like to learn more about which metrics you can check in Air or Ocean to validate your dollars at risk and protect your teams,<\/li>\n
- Join the Cargo Revenue Protection LinkedIn group<\/strong><\/a>\u00a0to see how you can protect your organization’s revenue and profit margins so you can offer more competitive pricing to gain more clients and reduce customer churn.<\/li>\n
- Read our recent article on why IT is not enough<\/strong><\/a>\u00a0<\/strong>to maximize profits and why current technologies provide mixed results.<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"
Whether you got into the international freight business yesterday or have been around to watch the dawn of containerization, you\u2019re probably familiar with the fact that Air and Ocean freight rates are driven by \u201cmarket pricing\u201d for carriers, 3PL\u2019s and shippers alike. This is absolutely true\u2026but only to a degree. In the real world, I […]<\/p>\n","protected":false},"author":3,"featured_media":362,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[19,32],"tags":[],"_links":{"self":[{"href":"https:\/\/argglobal.net\/blog\/wp-json\/wp\/v2\/posts\/359"}],"collection":[{"href":"https:\/\/argglobal.net\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/argglobal.net\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/argglobal.net\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/argglobal.net\/blog\/wp-json\/wp\/v2\/comments?post=359"}],"version-history":[{"count":5,"href":"https:\/\/argglobal.net\/blog\/wp-json\/wp\/v2\/posts\/359\/revisions"}],"predecessor-version":[{"id":366,"href":"https:\/\/argglobal.net\/blog\/wp-json\/wp\/v2\/posts\/359\/revisions\/366"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/argglobal.net\/blog\/wp-json\/wp\/v2\/media\/362"}],"wp:attachment":[{"href":"https:\/\/argglobal.net\/blog\/wp-json\/wp\/v2\/media?parent=359"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/argglobal.net\/blog\/wp-json\/wp\/v2\/categories?post=359"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/argglobal.net\/blog\/wp-json\/wp\/v2\/tags?post=359"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
- Join the Cargo Revenue Protection LinkedIn group<\/strong><\/a>\u00a0to see how you can protect your organization’s revenue and profit margins so you can offer more competitive pricing to gain more clients and reduce customer churn.<\/li>\n
- Let\u2019s connect<\/strong><\/a>,<\/strong>\u00a0if you\u2019d like to learn more about which metrics you can check in Air or Ocean to validate your dollars at risk and protect your teams,<\/li>\n